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TMI Blog2018 (7) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... d to reverse the credit and re-credit in their accounts. Even if they prepared the invoices, they ought to have cancelled the same and have to inform it to the jurisdictional commissioner. The Appellant after receiving the inputs from their suppliers availed Cenvat credit of Central Excise duty mentioned in the invoice as payable on such inputs, although it was not yet paid, in terms of Rule 8(2) of the Central Excise Rules, 2002. After the rejection of inputs, invoice was prepared for return of these inputs to its supplier creating liability of reversal of Cenvat credit availed on such inputs. However, the inputs remained in the plant itself and after due rectification, were again taken into their inventory and again Cenvat Credit on these inputs is availed in terms of Rule 16 (1) of the Central Excise Rules, 2002 on the basis of their own invoices. This shows that although the original duty liability on the inputs payable by the supplier is yet to be paid, but Cenvat credit availed under Rule 8(2). The fact about the availment of credit in respect of the rejected inputs on the basis of Appellant’s own invoices issued in the name of their vendors was never brought to the kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing CENVAT Credit twice in respect of the same inputs which is not admissible to them. Accordingly a show cause notice dated 3.2.2014 was issued to the Appellant as to why:- (i) An amount ₹ 42,64,135/- (Rupees Forty Two Lacks Sixty Four Thousand One Hundred Thirty Five Only ) wrongly availed and utilized should not be recovered from the Noticee in terms of the provisions of Rule 41 of CENVAT Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944. (ii) A penalty should not be imposed upon the Noticee under Rule 15(2|) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. (iii) Amount of interest at applicable rates should be recovered from the Noticee in terms of the provisions of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944. 2. The Adjudicating authority vide Order-in-Original dated 2.2.2015 disallowed the Cenvat Credit of ₹ 42,64,135/- wrongly availed and utilised by the Appellant alongwith interest and also imposed penalty on the Appellant. On Appeal filed by the Appellant, the ld. Commissioner (Appeals) vide impugned order dated 22.12.2017 disposed of the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to the factory is not enough to infer Revenue s knowledge about wrongful availement and the assessee has the burden to prove revenue s knowledge. Some of the Sections and Rule which are relevant for the decision are extracted as under:- Rules 4, of CENVAT Credit Rules, 2004 Rule 4(1) The Cenvat credit in respect of inputs may be taken immediately on receipt of the inputs in the fact manufacturer or in the premises of the provider of output service or in the premises of the job worker, in are sent directly to the job worker on the direction of the manufacturer or the provider of output service may be: Provided that in respect of final product, namely, articles of jewelers or other articles of precious metals under heading 7113 or 7114 as the case may be of the First Schedule to the Excise Tariff Act, the Cenvat duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufacturer on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker: [Provided further that the Cenvat credit in respect of inputs m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r clause(b) of sub-section(1) falls short of the amount actually payable the, the shall proceed to issue the notice as provided for in clause(a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section(2). (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any willful mis-statement; or (d) suppression of fact; or (e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment on duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice. (5) Where, during the course of any audit, investigation or verification, it is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... internet banking.] [Explanation.- For the purposes of this rule.- (a) the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the central Government by the specified date; (b) If the assessee deposits the duty by cheque, the date of presentation of the cheque in the bank designated by the Central Board of Excise and Customs for this purpose shall be deemed to be the date on which the duty has been paid subject to realization of that cheque.] [(1A) Notwithstanding anything contained in sub-rule (1), the duty on the goods removed from the factory or the warehouse, in the State of Gujrat, during the second fortnight of February, 2002 and the month of March, 2002 shall be paid by the 31st March, 2002:] Provided that where assessee in the State of Gujrat is availing of the exemption under a notification based on the value of clearance in a financial year, the duty on goods cleared during the month of Februrary,2002shall be paid by the 3st March, 2002. [Explanation.-For removal of doubts, it is hereby clarified that the duty liability shall be deemed to have been discharged only if the amount payable is credite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of two wheelers, the appellant need not prepare Invoice for sending the rejected materials back to the vendors and instead ought to have rectified the same in-house. They were also not required to reverse the credit and re-credit in their accounts. Even if they prepared the invoices, they ought to have cancelled the same and have to inform it to the jurisdictional commissioner. Rule 4 of the CENVAT Credit Rules, 2004 enumerates the conditions for allowing the Cenvat credit. As per Rule 4(1) of Cenvat Credit Rules, 2004, the Cenvat Credit in respect of Inputs may be taken immediately on receipt of the Inputs in the factory of the manufacturer. As per Rule 8(2) of Central Excise Rules, credit of duty is admissible as and when the goods and relevant invoices showing duty liability are received though the duty on the said goods is paid in subsequent month. According to Rule 16(1) of Central Excise Rules, any goods on which duty had been paid at the time of removal thereof are brought to any factory due to certain reason including any reason then the Appellant is entitled to take Cenvat to the duty paid as if such goods are received as inputs under the Cenvat Credit Rules, 2004. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore upheld the finding of the ld. Commissioner (Appeals) that the payment of Central Excise duty liability against removal of such inputs by the Appellant can be adjusted against duty liability which is held to be recoverable for availment of Cenvat credit two times on such inputs prior to discharge of Central Excise duty liability on such inputs. 8. The fact about the availment of credit in respect of the rejected inputs on the basis of Appellant s own invoices issued in the name of their vendors was never brought to the knowledge of the department. I have been informed that the Appellant in their monthly ER-1 returns had only shown the quantity of rejected material and duty debited against the same. They never disclosed the fact about in-house rectification of the Inputs by the Appellant and second time credit in respect of such Inputs. The said fact came into the knowledge of audit team at the time of audit only, otherwise the Appellant would have continued with this practice. This shows the mala fide intention of the Appellant. As per the ld. Advocate for the Appellant, the entire record of the Appellant was audited for the period 2008-09 and 2009-10, but at that time the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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